Oil near $100 as traders eye weak European economy

Oil prices rose back to near $100 a barrel on Friday, but gains were limited by concerns that Europe's debt crisis will undermine economic growth and crude demand.

By early afternoon in Europe, benchmark crude for December delivery was up 86 cents at $99.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.77 to settle at $98.82 in New York on Thursday.

In London, Brent crude for January delivery was up $1.40 at $109.62 a barrel on the ICE Futures Exchange in London.

Crude jumped to above $103 on Thursday before pulling back as Spanish and French sovereign debt yields rose sharply higher. Investors are increasingly worried austerity measures to contain debt levels could trigger a recession in Europe.

"This would have negative consequences for oil demand," said analysts at Commerzbank in Frankfurt. "Europe accounts for 16 percent of global oil demand and still consumes 40 percent more oil than China."

Friday's advance toward $100 was attributed mostly to the weaker dollar, which fell against the euro as the currency used by 17 European nations gained support from expectations that Greece and Italy were taking steps to better manage their financial difficulties.

The euro strengthened Friday to $1.3606 from $1.3466 in late Thursday, while the dollar slipped to 76.64 yen from 76.95 yen.

A weaker dollar often lifts oil prices by making crude cheaper for traders using other currencies.

Oil has surged from $75 on Oct. 4 amid signs the U.S. economy is growing slowly and will avoid a recession this year. The government said Thursday the number of people seeking unemployment benefits fell last week to the lowest level since April, suggesting that layoffs are easing.